Dear shareholders and investors,
I am pleased to report Premier Health’s results for the fiscal year ended September 30, 2024, and to update you on the status of our operations as well as recent developments.
Results and operations
The company’s revenues reached $158.2M for the fiscal year ended September 30, 2024 ($90.4M for the same period in 2023). This material increase ensued from the consolidation of Solutions Staffing for 326 days in FY2024 when compared to FY2023. However, hours billed at our two Quebec based per diem subsidiaries continued to decrease during the quarter, albeit at a slower pace than last quarter, following the provincial government’s cost-cutting efforts. This resulted in an operating loss of $0.8M for the fiscal year and triggered a non-cash impairment of $5.5M representing most of Code Bleu’s acquisition goodwill. The company generated an adjusted EBITDA of $1.0M for the three-month period ($6.6M for FY2024) compared to $2.1M for the same period in 2023 ($8.2M for FY2023) and the net loss for the quarter was $2.3M (net loss of $1.9M for the same period in 2023). Over the three-month period ended September 30, 2024, 311,112 hours were billed on a consolidated basis.
Per diem / locum tenens segment
The per diem and locum tenens segment includes Premier Soin and Code Bleu, two of our Quebec subsidiaries that offer their respective services for nursing and assistance by profile and by region. Per diem (“by the day”) and locum tenens (“to substitute for”) professionals work on an as-needed basis, sometimes for multiple health care institutions, and are typically assigned shifts at the last minute and paid directly tied to worked hours or occupy temporary vacant positions. Code Bleu and Premier Soin offer similar services but are independently managed, the weighting of different type of professionals active on the respective platforms are materially different, and geographical focus also varies from one business unit to the other, resulting in different revenue profiles.
Our two per diem business units’ revenues continued to decrease during the fourth quarter. Revenues for the two subsidiaries have been fluctuating and trending downward from one quarter to another since Bill 10 was sanctioned in April 2023. The per diem units are active mainly in urban centers in the province of Quebec where the provincial government has initially targeted staffing agencies as the source of all the province health care system issues. The recurring political message has evolved around a half truth about the costs of staffing agencies. On average there is no material difference between the cost of a staffing agency worker and a unionized health system worker. There is currently a shortage of health system staff to fill all work shifts, and institutions, mainly hospitals in the case of our per diem business, are using agency staff to fill the gaps. The use of agency staff represented historically between 3% and 5% of health staff (currently 1.8%) which, considering a $62 billion annual healthcare system budget, can as a matter of fact represent an important amount. However, the cost would have been almost identical should these work shifts had been filed by unionized health system staff. The real issue seems to be the overall costs and budget overrun of the entire Quebec health system, the recourse to staffing agencies being only one of the symptoms of the system’s condition.
The Ministry of Health issued directives and sanction threats aimed at reducing agency staff with the stated objective to hire back these personnel in the system. Negotiations with unions regarding personnel mobility, to provide a flexibility level similar to what staffing agencies provide, also took place recently. These negotiations where not successful enough to provide a clear advantage over status quo. In addition, many institutions recently cut back, or put on hold, hiring efforts to comply with austere budget guidelines. Quebec is in a very uncomfortable situation where independent healthcare professionals now have limited access to work shifts provided by agencies and limited access to a permanent job in the system as well. This can only result in a shrinking of the active workforce, a situation that is diametrically opposite to the current political message. The government is clearly on a mission to reduce and control the costs of the healthcare apparatus in the province and the range of measures has widen considerably to include doctors, infrastructure maintenance, and private clinics.
This situation is a tall order for the newly created Santé Québec organisation, a new provincial agency in Quebec that is overseeing the public health-care system since December 1, 2024. The agency was created as part of Bill 15, which was tabled at the National Assembly by Health Minister Christian Dubé. Santé Québec was created to make the health-care system more efficient and accessible as part of the wide-ranging reform that aims to reduce surgery delays, improve emergency room wait times, and offer better service. So far, Santé Québec’s management message of being a patient centric organisation in parallel with a $1 billion cost cutting mandate seems contradictory and has been received with a certain level of skepticism by the medias and the population.
It is not possible at this point to confirm if the per diem revenues decrease will be permanent or not. Both business units are now operating within the parameters of the recent April 14, 2024, award that integrated the notion of hourly rates ceilings previously indicated in decree 1481-2023. While the rate ceiling has an impact on gross margins, Premier Soin and Code Bleu can still be competitive at that price range that favors bigger and better organized staffing agencies. We still anticipate that a fair number a smaller agency, unable to cope with the new regulatory framework, will disappear over a ~24 months period. Personnel working for these small players will either migrate to bigger, better organized agencies, go back to the public system, or leave the sector altogether. Accordingly, we see this as a recruiting opportunity that could eventually result in an upward trend for revenues at our per diem business units assuming recruiting momentum picks up and the political and organizational landscapes stabilize.
Travel nurse segment
The travel nurse segment includes Canadian Health Care Agency, Premier Soin Nordik, Solutions Nursing as well as Solutions Staffing, four of our subsidiaries that offer their respective services to the federal and provincial governments for nursing and assistance including in remote regions. Travel nurses are healthcare professionals who work in temporary positions, carrying out short- and medium-term assignments that require travel.
Over the quarter, hours billed at our travel nurse units fluctuated from one unit to the other for diverse reasons, but overall, the outlook for the travel nurse sector is very positive.
Solutions Staffing (SSI) grew its client base by signing four new contracts with different health authorities and adding 32 clinical units with existing client operations during the 4th quarter, confirming a stable demand across healthcare roles. Hours worked softened during the period due to staff holidays over the summer, a recurring seasonality fluctuation. British Columbia health authorities are also finalizing a centralization process aimed at improving booking efficiencies and streamlining processes. These changes aim for long-term gains but have created temporary delays in staffing requests and service fulfillment during the transition, temporarily impacting on our ability to place staff in a timely manner.
SSI maintains a high client retention rate due to high fill rates, data sharing, and customized invoicing, all important aspects of a comprehensive service provider-to-client relationship in our sector. Most of the quarter’s expansion efforts were focused on allied health roles and the development of a permanent hire division, to enhance the collaboration aspect of client service and to position SSI as an operational partner. SSI currently has 33 active client contracts and this last year’s expansion reflects an increased demand across various departments at our clients’ facilities. Additionally, the four new contracts recently signed and the clients’ enthusiasm for the direct hire option signal a clear trend of optimizing staffing by using agency staff when and where it makes sense. Situations where our nurses transition from travel roles to permanent positions with our clients are provisioned in standard service agreements. This option supports our clients’ need for long-term staffing while providing a seamless transition for our nurses, if or when they decide to experience a different work life. This is perfectly aligned with our philosophy to put our personnel at the forefront of our business model, basically by offering them more choices and flexibility,
Premier Soin Nordik and Solutions Nursing, our two Quebec based travel nurse business units, were not materially affected by the operationalization of Bill 10 and we anticipate that the demand for independent labor for nursing and assistance in the province’s northern regions will remain stable, as it is the case with most Canadian northern and remote regions. Travel nurse business units were able to attract additional professionals in their network over the quarter including educators and social workers, a trend toward diversification that we are monitoring closely. Premier Soin Nordik is gradually developing activities in Northern Ontario with a short to medium term strategy to position itself for future government awards outside of the province of Quebec.
Revenues at Canadian Health Care Agency (CHCA) were stable over the quarter. The top line was not affected by a lower number of hours billed resulting from a normal seasonality effect for the summer period, over which travel nurses tend to accept shorter mandates. Relocation requests reached approximately 20 per month and required active management to contain associated contractual fees. In response to this issue, CHCA created a nurse relations associate role within the scheduling team. The role’s main responsibility is to provide better support to nurses over the full length of their mandate with the objective to increase billable hours and decrease expenses related to relocations through a more efficient management of nurse resources. A business development executive also joined the CHCA team at the end of August with the objective to diversify our client base in Ontario. Now that the onboarding and training program for the ISC contract is completed, we expect revenue stability for our business unit over the contractual period and management is focussing on business development and organic growth with the additions to the management team.
Costs and efficiency need to be part of the discussion
Quebec metrics
In 2023, Raymond Chabot Grant Thornton (RCGT) was mandated by the Entreprises Privées de personnel soignant du Québec (EPPSQ), an association regrouping healthcare staffing agencies in Quebec, to analyze statistical data concerning the evolution of hours worked and costs for independent labor as well as to measure the cost of using independent workers against the cost of staff in the health and social services network. In other words, how do the hourly rate paid for independent workers compares to the cost, including salaries, bonuses, general and specific benefits, and payroll taxes of a healthcare system employee in Quebec.
As a reminder, for years preceding the coming into effect of the reform of the Act respecting labor standards, healthcare care system workers were making an hourly wage of 21% to 26% higher than agency workers. The provincial government reform that came into effect in 2019-2020 re-balanced work conditions for independent workers and at the time RCGT’s analysis was completed, wages for hours worked by independent workers were almost equal to that of independent health care system workers. These statistics have limitations. Recent RFPs, which integrate the notion of hourly rate ceilings previously outlined in Decree 1481-2023, have resulted in an increase in the average hourly rate charged by agencies. These agencies can no longer propose location-specific pricing and must charge an average rate, even in locations where travel and lodging are not required. In addition, the statistics do not consider the recently negotiated collective agreements and the impact of post-pandemic inflationary pressures. It does however emphases the marginality of the cost difference.
Solution Staffing British Columbia initiative
SSI recently put forward a collaborative approach with selected health authorities, which consists of a bilateral sharing of information to help decision makers optimize their use of independent workers. Healthcare authorities are often inclined to reduce recourse to independent workers as a means of cutting costs, especially following heightened reliance on agencies during the pandemic. However, recourse to an independent workforce can contribute to contain or decrease costs if used in the right context or situations. This agency staffing cost calculator initiative represents an opportunity for SSI to reorient the conversation around wider considerations, including not only cost efficiency, but also adaptability and commitment to improved service outcomes in partnership mode.
The initiative demonstrates that the value provided by SSI goes beyond initial cost considerations and provides substantial long-term benefits. These include reducing indirect operational expenses, improving patient outcomes, reducing staffing volatility issues, and alleviating administrative burdens through streamlined processes and innovative solutions.
Numbers and results shown are health organization specific. Results will vary in function of contractual arrangements, human resources situations, collective agreements, and locations of the different health institutions.
SSI is involved primarily in the travel nurse business segment. This implies that workers travel outside their community to fill roles for longer periods of time. In that context, travel and accommodation expenses increase the cost of using temporary relief staff. Nevertheless, opting for this alternative to decrease the level of overtime filled by permanent staff is a financially sound decision. Public system nurses’ salaries and conditions are dictated by collective agreements negotiated by unions. An individual’s overall conditions are linked mainly to qualifications and seniority. Remuneration will include valuable benefits such as a defined pension plan, health insurance, vacation pay, and in certain cases premiums and overtime. Agency nurses’ remuneration typically does not include these benefits, this being compensated by a higher rate per hour paid to the nurse. Simply put on a dollar-for-dollar basis, agency and system personnel’s level of remuneration is approximately at par. In a similar fashion, nurses opting for agency work will trade job stability and security for schedule flexibility. It is a matter of personal choices.
More than economic value
Economic value is not the only benefit derived from the use of temporary relief staff. According to a recent survey within the nursing professional community, job stress or burnout (55%), concerns about mental health and well-being (48%) and lack of job satisfaction (40%) were the main issues put forward by over one-third (37%) of the group considering retiring. Better efficiency in resources management and scheduling often helps mitigate negative downstream effects such as higher turnover, increased training costs, and inconsistent care quality.
According to Statistics Canada (SC), there were 392,100 Canadians in 2023 working as professionals in nursing and allied health occupations, an occupational group that includes nurse practitioners, nursing coordinators and supervisors, and midwives. Over that period, one-third of nurses worked overtime; one of the highest amounts of overtime of all occupations. More specifically, about 3 in 10 employees in nursing (30.3%) reported working overtime, nearly double the proportion observed in 1997 (15.7%) when SC started publishing these data series. Nurses and allied health professionals who worked overtime hours added an average of 8.2 overtime hours per week in 2022, the highest amount on record. About 1 in 10 (10.2%) worked unpaid overtime, higher than the average across all occupations (8.7%). Nurses and allied health
professionals were absent from work for an average of 19 days in 2022 due to illness or disability, nearly one full month, based on a five-day workweek, up from 14.7 days in 2021. Any improvement in these statistics will positively influence the costs and management of healthcare human resources.
By demonstrating the long-term cost-savings and operational benefits in a collaborative approach that aligns our goals with those of health authorities in providing cost-effective, high-quality, and stable workforce solutions we can position our company as a preferred partner for long-term engagements. Shifting this narrative is essential for us to adapt to evolving market demands and ensure sustained growth and collaboration with key healthcare clients.
As the healthcare industry returns to pre-pandemic norms, the importance of long-term relationships with clients is becoming paramount. During the pandemic, the reliance on agency staff led to operating cost pressures for healthcare systems across Canada. Now, as provinces seek to reduce these costs, there is an increasing preference to work with fewer, more reliable agencies. While this trend might seem challenging, we view it as a significant opportunity to establish Premier Health as the leader in Canada.
Moving Forward
Our business model, digital platform, and mobile app are perfectly aligned with the gig economy framework and global service trends in general. We offer a level of flexibility that health systems cannot offer, both in terms of schedules, experiences, and remuneration options. Our efficiency enables us to bridge the gap between professionals looking for flexibility and organizations seeking staff relief. This translates into tangible economic and organizational benefits to health organizations that can be quantified. At this level we believe that we play a vital role in these ecosystems. It is also this flexibility that gives us the ability to adapt to quickly changing environments. With a geographically diversified revenue base and an excellent management infrastructure in place across Canada, we have the capacity to further diversify our revenue stream with other regional opportunities. We have had a good track record of acquiring solid organizations and we intend to capitalize on this.
Martin Legault
Chief Executive Office
